Statement: Canada Pension Plan marks Earth Day with US$300 million investment in fracking expansion

For Immediate Release: April 23, 2024

Statement: Canada Pension Plan marks Earth Day with US$300 million investment in fracking expansion

Toronto, ON | Traditional territories of the Wendat, Anishnaabeg, Haudenosaunee, Chippewas, and Mississaugas of the Credit First Nation - Yesterday, the Canada Pension Plan Investment Board (CPP Investments, or CPPIB) marked Earth Day by committing US$300 million to fracking expansion in Ohio. 

While CPPIB announced nothing about the investment, Houston-based oil and gas company Encino Acquisition Partners LLC (Encino Energy, or EAP), which is 98% owned by CPPIB, announced CPPIB’s commitment to “EAP’s accelerated development of the Utica oil play.”

This investment makes a mockery of CPPIB’s net-zero emissions commitment. The International Energy Agency and Intergovernmental Panel on Climate Change are clear that oil and gas expansion must cease immediately and production must be rapidly phased out in order to limit global heating to 1.5°C. According to the United Nations’ High-level Expert Group on the Net Zero Emissions Commitments of Non-state Entities, “Non‑state actors cannot claim to be net zero while continuing to build or invest in new fossil fuel supply... Net zero is entirely incompatible with continued investment in fossil fuels.” 

With this investment in fracking expansion, CPPIB continues a troubling trend of gambling Canada’s national pension fund on fossil fuel expansion, creating an undue risk of loss for Canada Pension Plan members. CPPIB is making an alarming bet on the world failing to limit global heating to safe levels, putting the Canada Pension Plan at risk from an accelerating energy transition and Canadians’ retirement security at risk from catastrophic climate change.

“I think many Canadians would be shocked and disappointed if they learned our national pension fund is pouring our retirement savings into fracking– on Earth Day of all times,” said Patrick DeRochie, Senior Manager of Shift. “Encino's expansion of fracking— while it may seem to be a good short-term decision for an oil and gas company— is actually undermining the long-term stability of the Canada Pension Plan because it's making the climate crisis even worse.”

EAP is one of Ohio's largest oil and gas producers. It was recently granted licenses to frack under two protected state wildlife areas. EAP also successfully pressured Ohio’s Cambridge City School Board to approve a lease agreement that allows the company to explore for oil and gas on school property. Ohio’s recent fracking approvals appear to be influenced by an oil industry front group, Consumer Energy Alliance, that's under investigation by the state's Attorney General's office for fraudulently submitting letters in support of fracking on state public lands.

Background Information

• EAP was formed in 2017 between CPPIB and Encino Energy to acquire oil and gas production and development assets in the U.S.

• As documented in CPPIB's 2019 annual report (p.84), CPPIB “(acquired) all of Chesapeake Energy’s Utica Shale oil and gas assets in Ohio via Encino Acquisition Partners (EAP), for US$2.0 billion. CPPIB invested approximately US$1 billion in EAP and owns 98% of the partnership.”

• CPPIB bizarrely classifies EAP as part of its “Sustainable Energies” portfolio. A Managing Director of CPPIB's "Sustainable Energies" group, James R. Jackson, sits on Encino's Board of Directors. Encino Director Michael Hill was also until recently a CPPIB Managing Director and head of its New York office before departing CPPIB for OMERS in August 2023.

• According to Climate Trace, the Utica-Marcellus Shale Region, which includes east and southeast Ohio, ranks second in the United States and fourth worldwide in greenhouse gas emissions related to oil and gas production and transportation. JobsOhio, the state’s private economic development agency, reports that 85% of U.S. shale oil production growth since 2011 has been in Ohio.

• CPPIB is the only Canadian pension manager assessed in Shift’s 2023 Canadian Pension Climate Report Card that received a lower score in any category than the previous year, largely due to a continuing pattern of troubling public statements and fossil fuel investments that are inconsistent with a credible, science-based net-zero plan.

• For a summary of CPPIB’s fossil fuel investments, estimated at between $21.72 billion and $63.3 billion, see Shift’s “Minimum Estimated Fossil Fuel Investments”.  

Contact information for interview requests:

Patrick DeRochie, Senior Manager, Shift Action for Pension Wealth & Planet Health; patrick@shiftaction.ca; 416-576-2701

Adam Scott, Executive Director, Shift Action for Pension Wealth & Planet Health; adamscott@shiftaction.ca; 416-347-3858 

Shift Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis. 

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